A former deputy editor of the News Of The World, arrested over alleged phone hacking, was paid £24,000 by Scotland Yard to work as a consultant.
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Neil Wallis was employed as recently as last year as sick leave cover for the force's deputy director of public affairs, a police spokesman has confirmed.
The 60-year-old's two-day-a-week contract was cancelled less than six months before the launch of Operation Weeting - the second investigation into phone hacking at News International.
Following this latest development, London Mayor Boris Johnson summoned the Metropolitan Police commissioner to City Hall to explain.
The two men are said to have had a "very frank discussion" lasting nearly an hour and a half.
"Sir Paul Stephenson reassured the Mayor that the investigation at Scotland Yard is proceeding as swiftly and thoroughly as possible," a spokesman for Mr Johnson said.
Hacking: Key Moments
"He explained the circumstances of the hiring on a part-time, short-term basis of Neil Wallis."
Meanwhile, Home Secretary Theresa May has written to Sir Paul Stephenson to get "the full picture" regarding Mr Wallis, a Home Office spokesman said.
Mr Wallis was arrested today in a dawn raid at his west London home on suspicion of intercepting mobile phones.
He was questioned for several hours at Hammersmith police station before being bailed until a date in November, Scotland Yard confirmed.
Mr Wallis joined the NOTW as deputy editor in 2003, and served under editor Andy Coulson, who was arrested by detectives last week.
He became executive editor of the Sunday tabloid in 2007, the same year Mr Coulson left.
The Met has confirmed that Mr Wallis' PR firm Chamy Media was employed in 2009 and last year to "provide strategic communication advice and support" while the force's deputy director of public affairs was on sick leave.
The force said in a statement: "Three relevant companies were invited to provide costings for this service on the basis of two days per month.
Abi Titmuss is latest celebrity to take legal action, say Sky sources
"Chamy Media were appointed as they were significantly cheaper than the others. The contract ran from October 2009 until September 2010, when it was terminated by mutual consent."
As part of the contract, Wallis advised the commissioner's office, the directorate of public affairs and specialist operations.
Sir Paul has made the chair of the police authority aware of the contract, which ceased before Operation Weeting started in January this year.
Before joining the NOTW, Mr Wallis was previously deputy editor at The Sun and editor of The People. After leaving newspapers in 2009 he started working for entertainment PR firm the Outside Organisation.
Relatives of Jean Charles de Menezes fear they have been targeted
He is a former member of the Editors' Code of Practice Committee, whose guidelines for journalists are enforced by self-regulatory body the Press Complaints Commission (PCC), and of the PCC itself.
The PCC has lately been accused by MPs of being incapable of tackling serious wrongdoing by journalists.
The arrest is part of Operation Weeting - the probe into mobile interceptions made by News International journalists.
It is the ninth arrest Scotland Yard has made since the investigation was launched and came as Deputy Prime Minister Nick Clegg insisted Rupert Murdoch must allow himself to be questioned by MPs over the scandal.
Read the latest tweets and updates from the Sky team
Meanwhile, detectives have told a cousin of Jean Charles de Menezes his number was found on the phone-hacking list of a News Of The World private investigator.
Other people connected to the young Brazilian shot dead by police marksmen at Stockwell Tube station in 2005 fear they too may have been targeted.
Relatives, campaigners and members of the family's legal team have given police their phone numbers so officers can check whether they were victims of hacking.
Glamour model Abi Titmuss has joined a number of other celebrities taking legal action against News International, the Sunday tabloid's publisher.
Andy Coulson was released on bail after being quizzed by police
The 35-year-old's agent said police had informed her that her phone may have been hacked.
The former nurse became a familiar face in 2003 while supporting her then boyfriend John Leslie through rape charges which were later dropped.
Mr Coulson, 43, was released on bail along with ex-royal editor Clive Goodman, 53, last week.
They were held by detectives investigating the phone hacking scandal and payments to officers.
An unnamed 63-year-old man was also arrested last week in connection with allegations of corruption and later released.
:: Growing calls for hacking inquiry in the US
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